Alex has a charge account at Diamond Jewelers, which uses the unpaid-balance method of computing finance charges. The periodic rate is 1.85%. If their previous balance is $478.68, they had payments/credits of $250.00, and new purchases of $38.50 what is their (a) unpaid balance, (b) finance charge, and (c) new balance?
Alex has a charge account at Diamond Jewelers, which uses the unpaid-balance method of computing finance charges. The periodic rate is 1.85%. If their previous balance is $478.68, they had payments/credits of $250.00, and new purchases of $38.50 what is their (a) unpaid balance, (b) finance charge, and (c) new balance?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Example 2
Alex has a charge account at Diamond Jewelers, which uses the unpaid-balance method of
computing finance charges. The periodic rate is 1.85%. If their previous balance is $478.68,
they had payments/credits of $250.00, and new purchases of $38.50 what is their (a) unpaid
balance, (b) finance charge, and (c) new balance?
Example 3
Roger's charge account uses the unpaid balance method to compute the finance charge at a
monthly periodic rate of 2.3%. During the month he charged $128.47, made a $150 payment
and had a $7.45 finance charge. What is his (a) unpaid balance, (b) previous balance, and
(c) new balance?
Expert Solution
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Unpaid balance method computes the finance charge on the previous balance which is not paid yet. It ignores the new purchases into computation.
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